“A crisis is a horrible thing to waste,” says Paul Pede, the co-founder and CEO of Carbonix, an Ontario-based Indigenous technology company that works with oil sands companies. “If your eyes are open to it, the opportunities are there – and other opportunities are emerging.” Pede’s company has been developing products like activated carbon that help industrial operators remove and remediate waste from their sites for more than a decade and has worked in the past with Alberta Innovates to develop applications for – and from – oil sands byproducts.

In Canada, he says, that’s “easily” a $100-million opportunity. “But now, what we recognize is that if you take a lot of the same processes that we developed, there are applications in other areas.” That includes everything from grey areas like the petrochemical industry to unabashedly green ones like renewable-energy-based hydrogen production and energy storage, and they substantially increase the size of the prize his company is chasing. “With the processes that we’ve developed, we’re now becoming an advanced materials cleantech company – and probably the only Indigenous advanced materials cleantech company in the country.”

Pede isn’t alone here. Jim Boucher, the former chief of the Fort McKay First Nation, launched the Saa Dene Group of companies in 2020. In addition to investments in a new construction firm, an education publishing company and a virtual healthcare portal, one of its earliest forays was a partnership with Calgary’s Acceleware, a cleantech company that says it can produce oil and gas with near-zero upstream GHG emissions. The Acceleware|Kisâstwêw partnership will see the two partner on a pilot project in the Cold Lake oil sands region, one that they hope will demonstrate the technology’s potential to larger oil and gas companies. “I think it’s a game-changer with respect to how we produce oil in Alberta,” Boucher says. “And I think that will address a lot of the issues and concerns that environmental groups have, as well as people in Canada and around the world, with respect to how development occurs.”

Acceleware’s RF (for “radio frequency”) XL technology performs the same basic function as conventional techniques, which use steam to move stubborn bitumen reserves to the surface. But unlike those conventional techniques, which use natural gas to generate the heat, Acceleware’s proprietary technology converts electricity into electromagnetic energy and turns the water already present in the formation into steam. The company says their solvent-free method can reduce operating and capital costs by 40%, virtually eliminates water use, and significantly reduces upstream emissions, depending on the kind of electricity that’s used. That’s increasingly going to come from lower-carbon sources, given Alberta’s enviable renewable-energy potential and the fact that its remaining coal-fired electricity plants are scheduled to switch over to natural gas by 2023.

So why hasn’t technology been more widely embraced? In part, Acceleware CEO Geoff Clark says, it’s a function of the way the business used to operate. “They’re all about de-risking rather than game-changing, monumental solutions.” Before, the people who might have championed these sorts of ideas didn’t have the social or corporate capital they needed to step out on a ledge – and those who did often found themselves getting pushed off the ledge.

But the disruptions that defined 2020, from the COVID-19 pandemic to collapsing oil prices and the rise of ESG investing, gave those potential champions new life. And while Keystone XL’s failure is bad news for Albertan jobs and profitability in the medium-term, it may encourage more people to start swinging for the fences on climate-friendly technologies rather than settling for bunt single after bunt single. “I think it’s kind of a rebirth that I’m witnessing within the companies that we’re talking to,” Clark says. “The people that were touting ESG and sustainability within organizations before were not getting the airtime that they get now. Now we’re seeing people really interested in what we’re trying to do,” he says.

As it turns out, those people included Jim Boucher and the Saa Dene Group. And while he describes their coming together as “a happy coincidence,” Clark thinks the relationship can serve as a role model for the industry as a whole. “We think that in order to get consent – and not just consent, but enthusiasm – among Indigenous groups, you have to show the benefit. And that benefit has to go beyond just dollars. It has to address poverty, it has to address skill development – basically everything that Indigenous groups have been asking this industry for.”

For their part, Albertans are increasingly asking for decisive action on climate change. According to a December poll conducted by Janet Brown Opinion Research for the Pembina Institute, 68% of Albertans support the goal of achieving net-zero emissions by 2050. And while 65% said the province’s oil and gas industry is a “global leader in emissions reduction,” 81% think the province is “too dependent on oil and gas.” The furious public uprising against the province’s plan to open the eastern slopes of the Rocky Mountains to open-pit coal mining, an uprising that included country musicians like Paul Brandt and Corb Lund as well as southern Alberta ranchers and Indigenous communities, speaks to the province’s rapidly changing attitudes.

And it’s not just voters in Alberta who want to see the industry move faster when it comes to climate change. In his 2021 letter to CEOs, BlackRock’s Larry Fink pointed out that between January and November of 2020, investors poured US$288 billion into sustainable assets, a 96% increase over the whole of 2019. “I believe this is the beginning of a long but rapidly accelerating transition – one that will unfold over many years and reshape asset prices of every type. We know that climate risk is investment risk. But we also believe the climate transition presents a historic investment opportunity.”

That’s an opportunity that Bryan Helfenbaum is particularly excited about. As the executive director of advanced hydrocarbons with Alberta Innovates, he’s been tasked with spearheading the government’s Bitumen Beyond Combustion program. And right now, he likes what he sees. After all, while the growing adoption of electric vehicles will reduce the demand for gasoline and diesel, he says there are still plenty of ways that carbon-based resources can contribute to the low-carbon economy: “The ‘low-carbon economy’ isn’t actually low carbon – it’s low carbon in the atmosphere. A lot of the stuff around you right now is made out of carbon. So it’s just about keeping carbon in solid form and using it, as opposed to combusting it.”

Alberta Innovates has a whole portfolio of investment areas that align with Canada’s net-zero goals, from digital health and smart agriculture to biotechnology and artificial intelligence. But it’s the alternative applications for bitumen where the dotted line between Alberta’s past and its possible future is most clearly visible. Take carbon fibre, a high-strength, low-weight material that can be spun out of bitumen. Over the last decade, the global demand for it has doubled, with much of that coming from the enormous growth of the wind industry and its ever-expanding appetite for more, bigger and lighter turbine blades. But its future, and Alberta’s role in it, depends on drawing the right lessons from the province’s past. “What we don’t want to do is find ourselves shipping dilbit to the U.S., just like we do today, and it’s there where they convert it into advanced carbon materials,” Helfenbaum says.

That’s one of the things that Carbonix’s Paul Pede is trying to avoid. Pending the resolution of certain COVID-related concerns, his company plans to start a demonstration project in Fort McMurray – and use it to develop new applications for its existing processes and technology. And while it will continue to focus on developing remediation-related products for industrial projects, he says the Government of Alberta’s Natural Gas Vision and Strategy – one that revolves around expanding into areas like hydrogen, petrochemicals and recycled plastics – also has plenty of upside. “The opportunities were already starting to emerge, and there was a focus by the province already on becoming a supplier of higher-value added products based on the same resources that are available now. They’re just being processed and presented in a different manner.”

On this issue, at least, the federal and provincial governments seem mostly aligned. Despite some predictably partisan bluster from Jason Kenney, Alberta’s natural gas strategy and the federal government’s commitment to reach zero plastic waste by 2030 should work in harmony. And the associated economic upside is considerable: in January, a group of 40 companies that includes Canadian Tire, Coca-Cola Canada and Maple Leaf Foods signed on to the Canada Plastics Pact, which is aiming for a so-called circular economy for plastics by 2025. If it acts decisively, Alberta could become Canada’s go-to plastics recycling hub.

But for all this light at the end of the tunnel, there’s still some actual tunnel to get through first. “People in Calgary and Alberta are going to have to work through their grieving process,” Clark says, “and get past their feeling of persecution and realize that this industry has to go on – that life has to go on.” In order for that to happen, governments will need to do more to help the workers who used to build major pipelines adjust to this new reality. Iron & Earth, a worker-led non-profit based in the province, has called for a “prosperous transition,” one that would help create “one million new climate careers” and launch a new cycle of prosperity in the prairies.

At a proposed cost of $110 billion over 10 years, it wouldn’t be cheap. But the cost of not funding this sort of just transition, in terms of missed economic and environmental opportunities, could be far higher. If it works, people may look back on Keystone XL and the decision to cancel it – again – as an unwitting midwife for the long overdue birth of a new economy in Alberta. “I’m not going to say it’s going to be easy,” Pede says. “But in the last year, there’s been a great shift towards investing in this sector.” That shift, in time, could be far more important to Alberta’s economy and its future than any pipeline project.

Max Fawcett is a freelance writer and the former editor of Alberta Oil magazine.

The post Was cancelling Keystone the cleantech catalyst Calgary didn’t know it needed? appeared first on Corporate Knights.

“If that doesn’t tell you a story about how the math has changed, nothing will,” says Andrew Grant, the head of Oil, Gas and Mining at Carbon Tracker, a London-based not-for-profit think tank that researches the impact of climate change on financial markets. “I think it’s become very clear that the world is different now.”

The contours of that new world were mapped out in BP’s 2020 Energy Outlook, which the company released in mid-September. Gone was its bullish scenario from the previous year’s forecast that suggested oil demand could rise to 130 million barrels per day by 2040. Instead, it thought the best that oil producers should hope for is that demand levels recover to approximately 100 million barrels per day and flatline there for the next decade or so. But in both its “rapid” and “net-zero” scenarios, where climate policy is adopted around the world to varying degrees of ambition, demand falls off much more rapidly.

BP’s net-zero scenario made headlines around the world for suggesting that demand for oil has already peaked, and the company is acting like it believes that will happen. In addition to announcing that it will reduce its oil and gas production by 40%, it also pledged to cut its refining output by 30% within 10 years, all while shifting approximately one third of its new investments to low-carbon energy.

BP isn’t the only European oil and gas company that has recently announced a shift toward a lower-carbon business model. In April, Royal Dutch Shell committed to reaching net-zero emissions by 2050, with CEO Ben van Beurden noting that “global society, overall, may have until around 2060 to reach net-zero emissions. But Shell recognizes that it stands within a section of society that needs to move faster. And so that is what we intend to do.” France’s Total SE has also pledged to eliminate greenhouse gas emissions associated with its operations by 2050, while Italy’s Eni went even further by committing to hitting that target by 2040. But BP’s pledge to reduce its actual production, rather than simply eliminate the greenhouse gas emissions associated with it, is a major step forward. “It’s been a bit of an arms race, or so it seems, over the last year or so,” Grant says. “And BP has really jumped into the lead in that race.”

“It’s been a bit of an arms race, or so it seems, over the last year or so, and BP has really jumped into the lead in that race.”

–Andrew Grant, head of Oil, Gas and Mining at Carbon Tracker

Here in Canada, though, the race has been slower to get underway. Take Enbridge, which has one of the biggest renewable energy portfolios in Canada. In a June piece in the Financial Post, CEO Al Monaco said his company would take a “gradual” approach to increasing its exposure to renewable energy, which currently makes up approximately 5% of its total assets. Large companies like Suncor, Cenovus, and Canadian Natural Resources have all signalled their intention to reach net-zero emissions by 2050, but they haven’t fleshed out how they’re actually going to do that. Instead, there’s been a lot of hand-waving toward technological innovation and the ability of the industry to rise to challenges, with a focus on things like improved extraction processes and the replacement of coke-fired boilers with higher-efficiency cogeneration units.

These are the sorts of improvements that have helped drive the per-barrel emissions associated with oil-sands production down by 21% between 2009 and 2017. But they haven’t prevented the industry’s overall emissions from rising, as soaring production has swamped these efficiency gains. For all the recent talk about low-carbon innovation, some industry watchers point out that Canadian oil companies haven’t really taken any meaningful risks yet. Suncor, for example, recently announced a $15-million investment in LanzaJet, a new venture that will make lower-carbon jet fuel and renewable diesel; the company also added $50 million to the $76.3 million it had already invested in Enerkem’s biofuels. But those figures are only a fraction of Suncor’s revised 2020 capital budget, which is expected to range between $3.6 and $4 billion.

“I think our pseudo-national oil companies are the least innovative national oil companies in the world,” says Sean Collins, founder of Terrapin Geothermics and an Energy Futures Lab fellow. “Even your Saudi Aramcos of the world are putting billions of dollars into direct renewables, and we’re nowhere to be seen.”

“I think our pseudo-national oil companies are the least innovative national oil companies in the world.”

–Sean Collins, Energy Futures Lab fellow

The idea of reducing production, rather than just the emissions associated with it, to meet net-zero goals remains largely taboo among industry leaders. When asked by the Financial Post back in February if his company would consider letting its production decline in the face of growing environmental concerns, Suncor CEO Mark Little said, “We don’t think that’s a solution.” By June, however, Little had written an op-ed in Corporate Knights stating that energy companies are “best positioned to invest in and lead energy transformation,” noting that “now is the time to take a big step forward.”

Canadian companies have yet to really take those steps – or undertake the same transformations that are proving profitable in Europe. In November 2017, for example, Italy’s ERG received €270 million for selling off its share of a joint venture that included 2,600 service stations and a minority stake in an oil refinery. That completed its transition from a company that owned refineries, pipelines and gas stations to one that invested primarily in wind, solar and hydroelectric projects – and since then, its shares are up nearly 50%. Earlier that year, Denmark’s Ørsted (formerly the Danish Oil and Gas Company) completed a similar transformation by selling its oil and gas business to petrochemical company Ineos for €$1.05 billion. Its shares have more than doubled since then. And the value of an investment in Finland’s Neste, which began as that country’s state oil company but has built a growing fleet of renewable diesel plants in recent years, has tripled over the same period. By comparison, the S&P Commodity Producers Oil & Gas Exploration & Production Index has been cut in half.

That sort of pivot would be harder to make for Canada’s oil and gas companies, which have many decades worth of reserves on their books (and nobody to sell them to). But they may not have to pivot as aggressively as their European peers. Instead, they could tap into those reserves and put them to uses other than combustion, from the creation of high-strength carbon fibre (which can displace steel) to the production of lower-carbon blue hydrogen. “That feels like a much different proposition than getting into solar or wind,” says Jamie Bonham, the director of corporate engagement at NEI Investments. “It feels like something that’s more in their wheelhouse.”

But if Canada’s oil and gas companies aren’t keeping up with the European supermajors, they’re at least ahead of their peers south of the border. The climate pledges of large integrated companies like ExxonMobil and Chevron are conspicuously modest, while the ones made by shale producers are effectively non-existent. Canadian oil companies have largely accepted the nature of the challenge and the need for tools like carbon pricing to help meet it. “The existence of this trajectory is something that’s no longer a debate,” Bonham says. “That puts the industry in a better place than its U.S. peers.”

Husky Energy, for example, recently announced that its executives will now be paid in part based on how effective the company is at achieving its target of reducing greenhouse gas emissions by 25% by 2025. “The conversation is beginning to occur in Canada,” says Janet Annesley, Husky’s senior vice-president of corporate affairs and human resources. Meanwhile, the relatively concentrated nature of Canada’s industry, both in terms of the number of companies and the geographic footprint of the assets they control, gives it an edge when it comes to deploying new technology. “When you have the world’s second-largest oil resource in one place, and projects that have a 30- to 50-year lifespan, you have the ability to focus on finding those solutions – versus some of the shale plays that are much shorter in life-span and are more dispersed and make the cost of applying those solutions so much greater,” Annesley says. “They can’t even really capture their methane down there because they don’t have the pipeline network.”

The big question now is whether those Canadian companies will take advantage of these relative strengths or squander them if and when oil prices recover. “The Canadian companies will say the words,” says Collins. “But do they believe it in their souls – that it’s the future? Because if you don’t, then as soon as prices rise again it’s back to your comfort zone.” Even if they continue moving in the right direction, Bonham worries that it’s not fast enough. “I feel like they’re on the right path, and they’re attacking some of the right issues. But it’s not entirely clear to me that the urgency of the moment is being fully embraced.”

Max Fawcett is a freelance writer and the former editor of Alberta Oil magazine.

Big Oil’s clean investments are still small fry

With oil companies committing to net-zero targets, Corporate Knights decided to follow the money to see exactly how much has been allocated to low-carbon investments so far. We tallied spending in R&D, capital expenditures, acquisitions and other investments (including joint ventures and share purchases in other companies). Here’s how it breaks down:

What % of their investments were clean in 2019?

BP: 0.77%
Chevron Corp.: 0.0%
Exxon Mobil Corp.: 0.0%
Royal Dutch Shell: 0.07%

Total SE: 0.0%

METHODOLOGY: Investments were determined to be clean if they corresponded with the Corporate Knights Clean Revenue Taxonomy. General commitments and future-oriented pledges were not included. If investments were spread over multiple years (e.g. a wind farm being built over three years) and the annual investment was not disclosed, the total investment was divided by the years the project would take to complete, determining an approximate annual expenditure. If no financial data was available, the investment value was marked as $0. All companies were contacted to verify the numbers.

The post Big oil, small ambition appeared first on Corporate Knights.

That story goes far beyond the realm of turbo-powered supercars. California’s recent decision to ban the sale of all diesel trucks and vans by 2045 laid down the latest marker about the diminished role that fossil fuels are going to play in the future. And while hydrogen will be competing with electric vehicles for that market share, it’s clear that hydrogen is ready to take on a much bigger role than it has in the past as it expands into energy storage, heavy industry and transportation.

“I think we’re just in the first few months of a fundamental retooling of energy systems that could very well dominate for generations to come,” says Dan Wicklum, CEO of The Transition Accelerator, a pan-Canadian non-profit dedicated to maximizing Canadian opportunities in the ongoing energy transition.

By most accounts, Germany has taken an early lead in the race to dominate this new market. Its recently announced National Hydrogen Council will oversee a plan that includes €9 billion worth of investment in both research and companies that can help it meet its goal of five gigawatts (GW) of hydrogen capacity (the equivalent of five nuclear power stations) by 2030 and 10 GW by 2040. “The time has come for hydrogen and the technologies enabling its use,” said Peter Altmaier, Germany’s minister for economic affairs and energy, in July. “We must therefore harness the potential for economic output, employment, and the climate, and do this now.”

Germany isn’t alone in its belief that hydrogen needs to play a much bigger role in the economy of the near future. Last week, France rolled out €7 billion for the development of a hydrogen industry and other green technologies as part of its €100 billion green recovery package, aiming for 6.5 GW of installed capacity by 2030.

Europe’s broader hydrogen strategy calls specifically for 40 GW of green hydrogen-production capacity – that is, hydrogen produced from renewable energy like wind and solar – to be installed by 2030, with an additional 40 GW “in Europe’s neighbourhood with export to the EU.” That isn’t going to be easy. Next year, Spain’s Iberdrola is expected to finish building Europe’s largest dedicated green hydrogen-production facility, one whose hydrogen fuel will be used to help make fertilizers. But as Sebastian Kennedy noted in the Energy Flux newsletter, “To achieve only the within-EU 2030 target [for hydrogen development], Europe would need to build around 200 such facilities every year for the next decade.”

That’s where Canada can play an important role. Europe will try to get some of that hydrogen from North Africa, but the mismatch between the desired supply and the available capacity of hydrogen – and Europe’s obvious need to avoid depending too heavily on Russian imports – creates a perfect opening to build a new export-driven energy economy here. Wicklum says that opening is a function of the cost advantage Canada has in creating both blue hydrogen – that is, hydrogen derived from natural gas that, unlike so-called grey hydrogen, uses carbon capture technology to sequester emissions – and green hydrogen, which is the product of combining renewable energy with inputs like water and biomass.

And while Europe has indicated that it wants to rely entirely on the latter, it may need both blue and green hydrogen to meet its targets. The natural gas sector is hopeful. As James Watson, the secretary general of Eurogas, told Greentech Media, “They know that they won’t get to carbon-neutrality without it. It’s just I think that it’s difficult for them to openly say that.” That would be good news for Canada, which can provide both at very competitive costs. “Independent analysis has shown that Canada is about the cheapest producer of both green and blue hydrogen on the planet,” Wicklum says.

Maggie Hanna, the president of Common Ground Energy and a fellow with Alberta’s Energy Futures Lab, says that while hydrogen is currently being sold for as much as $30 per kilogram, it will soon settle at so-called diesel parity, or around $4 to $5 per kilogram. That bodes well for Alberta, which can produce blue hydrogen at much lower prices. “In Alberta, we can make hydrogen for $1.35 a kilogram, with sequestration, which will go to less than a buck when we have the proper carbon pricing regime in place,” Hanna says. That would require a $50 per tonne carbon price which isn’t much of a stretch from its current level of $30 per tonne. And while green hydrogen would cost more in Alberta, the province has plenty of wind and solar potential that could be tapped to make it.

Quebec’s enormous stores of hydroelectric capacity, combined with its proximity to global export markets, makes it a perfect place to produce green hydrogen – and that’s exactly what’s happening. In January, Quebec’s H2V Energies announced that it was opening its order book on a new plant that can turn residual residential biomass materials (such as waste wood and paper) into green hydrogen, one with an annual capacity of approximately 49,000 tonnes. And at an expected cost of $3.50 per kilogram (or US$2.68/€2.41), the company says that its hydrogen will be “less expensive than diesel fuel and defying all competition.”

Unlike proposed oil pipelines to the east and west coasts that have divided Canadians and sparked conflict and protest, a hydrogen pipeline could be a unifying force. “If you’re repurposing infrastructure to move a fuel that is not just compatible with, but required and necessary to have a net-zero future, then I think there’s the potential for common ground between these groups and regions,” Wicklum says.

So what will it take for Canada to seize this opportunity to reduce emissions, diversify its energy exports and unify an increasingly fractured country? The fact that Natural Resources Canada is in the process of designing a national hydrogen strategy is an important – and necessary – first step. But advocates like Hanna say we also need to align our regulations and standards with Europe – pronto. “In the same way that oil is traded around the world using the US dollar as its currency, hydrogen’s going to be traded on the euro because they were the first movers.”

The recently signed Comprehensive Economic and Trade Agreement between Europe and Canada will help with that integration process. But Canada still has important work to do if it wants to meet Europe’s growing appetite for zero-carbon energy. Getting there will require the kind of government support that is increasingly common in other emerging hydrogen economies such as Germany and France. For example, of the €9 billion Germany is allocating to green hydrogen development, €2 billion will be dedicated to creating partnerships with countries where green hydrogen can be efficiently produced.

Canada’s federal government seems inclined to make some aggressive bets right now. With Prime Minister Justin Trudeau promising that September’s throne speech will lay out an “ambitious green agenda,” it’s safe to assume that some of those bets will be made in the area of clean technology and energy. Natural Resources Minister Seamus O’Regan told the CBC, “Things are happening quickly…trends we saw before the pandemic have accelerated. We want to be ahead of it.” The Canadian Hydrogen and Fuel Cell Association has said it hopes to see the feds earmark $3 billion for hydrogen. The Corporate Knights Building Back Better report recommended that the feds create a multiyear $40.5 billion natural resources and EV fund, with $5 billion set aside to close research gaps, and crowd in an additional $105 billion in private sector investment.

But if that money doesn’t materialize, Canada may miss out on far more of it being generated down the road. “This is a competitiveness play over decades, where we need to be able to position ourselves to win economically and environmentally,” Wicklum says. “If we don’t, we just won’t be relevant.”

Max Fawcett is a freelance writer and the former editor of Alberta Oil magazine.

With the support of the Embassy of the Federal Republic of Germany in Canada.

The post Hydrogen’s big moment appeared first on Corporate Knights.